Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Tuesday, September 22, 2009

Bank Competition and Firm Growth in the Enlarged European Union

Posted by D. Daniel Sokol

Gábor Pellényi (research fellow, ICEG European Center) and Tamás Borkó (research fellow, ICEG European Center) examine Bank Competition and Firm Growth in the Enlarged European Union.

ABSTRACT:We examine the impact of bank competition and institutional factors on net firm entry in a sample of European manufacturing industries over the 1995-2006 period. Taking into account industry differences in the need for external finance, we find that bank competition helps firm entry. In addition, better institutions - especially legal structure and property rights - also have a positive impact, particularly through a better functioning financial system.

September 22, 2009 | Permalink | Comments (0) | TrackBack (0)

Monday, September 21, 2009

EC Decision Against Intel is Available

Posted by D. Daniel Sokol

Here it is.  I am under tight deadlines for overdue papers so I have not had time to read it.

September 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Important Changes to Antitrust Litigation Course: Preparing and Trying an Antitrust Case

Posted by D. Daniel Sokol

ABA SECTION OF ANTITRUST LAW
Antitrust Litigation Course: Preparing and Trying an Antitrust Case
Have You Registered?

Important Change to Litigation Course: Trying a Merger Case

As the Chinese proverb goes, “we live in interesting times.” In the current economic environment it is critical that our Section respond to the needs of our members—even if it means that the Section incurs some additional financial costs. In response to budgetary constraints being faced by antitrust practitioners in both the private and public sectors, we are making some important changes to our upcoming litigation course that we hope will allow the Section to provide value to its members:

  • The litigation course will now be held in Washington, D.C.—not Chicago—at the offices of Hogan & Hartson LLP—making it more accessible to a greater number of our members.
  • The course will be on one day—October 16, 2009—thereby decreasing time away from the office and travel expenses.
  • The costs have been substantially reduced as follows
    • government lawyers $150 (Section members)/$200 (non Section members)
    • other attendees $375 (Section members)/$475 (non Section members)

Although we have made these changes, please be assured that the quality of the program will not be affected. We will have the same stellar faculty; we will still use the same fantastic course materials, which will provide useful examplars for an antitrust litigation practice; and we will still have all phases of the trial demonstrated.

I would like to thank the entire steering committee, the ABA staff, Program Officer Barry Nigro, as well as the faculty of this course and Hogan & Hartson LLP for helping me, on very short notice, to make these changes possible in response to the current financial environment.

For further information and to register, please go to http://www.abanet.org/antitrust/litigation2009.html.

I hope to see you and your colleagues in Washington, D.C. on October 16th.


Ilene Knable Gotts
Chair, Section of Antitrust Law



September 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Measurement of the Market Power of Firms: The Japanese Case in the 1990s

Posted by D. Daniel Sokol

Kozo Kiyota, Yokohama National University - Faculty of Business Administration, Takanobu Nakajima, Keio University - Faculty of Business and Commerce, and Kiyohiko G. Nishimura address Measurement of the Market Power of Firms: The Japanese Case in the 1990s.

ABSTRACT: This article presents a new simple econometric framework for the estimation of individual firms’ markup over their marginal cost, taking account of firm heterogeneity, demand-driven cyclical price changes, and the limited availability of firm-level information. The framework is applied to study markup of Japanese firms in manufacturing and wholesale/retail trade for 1994-2002. The results indicate that, on average, the Japanese markets become more competitive in the 1990s than before even in non-manufacturing industries. We also find sizable heterogeneity and non-negligible pro-cyclicality in the markup of the Japanese firms.

September 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Collusion, competition and piracy

Posted by D. Daniel Sokol

Francisco Martínez-Sánchez (Universidad de Alicante) offers his thoughts on Collusion, competition and piracy.

ABSTRACT: In this paper we analyze firms' ability to tacitly collude on prices in an infinitely repeated duopoly game of vertical product differentiation. We show that firms collude if and only if their discount factor is high enough, i.e. if they value future profits sufficiently. We also show that a lower cost of copying facilitates collusion but that a higher quality of the copy hinders collusion. Thus, the overall effect of these new characteristics of copies made by consumers is ambiguous.

September 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Justice Department Submits Views on Proposed Google Book Search Settlement

Posted by D. Daniel Sokol

Because of Rosh Hashana, I did not post on the biggest news of the weekend - the DOJ Antitrust Divisions submitted  its views on the Google Book Search Settlement.

September 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Relative Profitability of Dynamic Walrasian Strategies

Posted by D. Daniel Sokol

Weihong Huang (Division of Economics,School of Humanities and Social Sciences, Nanyang Technological University, Singapore) writes on Relative Profitability of Dynamic Walrasian Strategies.

ABSTRACT: The advantage of price-taking behavior in achieving relative profitability in oligopolistic quantity competition has been much appreciated recently from economic dynamics and evolutionary game theory, respectively. The current research intends to provide a direct economic interpretation as well as intuitive justification and further to build a linkage between different perspectives. In particular, a detailed illustration of an arbitrary oligopoly that produce a homogenous product is presented. So long as the outputs of other firms are fixed and the residual demand is downward sloping, for any two identical firms whose cost functions are convex, their output space can be divided symmetrically into mutually exclusive relatively profitability regimes. Furthermore, there exist infinitely many relative-profitability reactions for each firm in such “residual” duopoly, all of which intersect at the “residual” Walrasian ! equilibrium. This suggests that sticking to this dynamical equilibrium output constantly (i.e., the static Walrasian strategy) turns out to be a relative-profitability strategy at each period. On the other hand, regardless of what strategies its rival may take, a firm adopting price-taking strategy or more generally defined dynamic Walrasian strategies can achieve the relative profitability if an intertemporal equilibrium is reached. The methodology adopted and the conclusions arrived clarify the confusions and misunderstandings due to the different usages of same terminologies under different frameworks and generalize the previous available results in the literature to a higher level and a broader context.

September 21, 2009 | Permalink | Comments (0) | TrackBack (0)

Competition Come Full Circle? Pending Legislation to Repeal the U.S. Railroad Exemptions

Posted by D. Daniel Sokol

Chris Sagers (Cleveland State Law) asks Competition Come Full Circle? Pending Legislation to Repeal the U.S. Railroad Exemptions.

ABSTRACT: The single oldest and probably most convoluted story in American antitrust is its relationship with the railroads. Railroads were among the first business entities in the United States to be perceived as social problems in and of themselves, regardless of any aid or preference gotten from government. The “populism” that had been a part of American politics since colonial times shifted from fear of government-supported aristocracy to fear of private economic power in its own right, and the railroads were among the first to embody that free-standing power. Perceived railroad abuses were chief motivations for the first state and federal antitrust statutes, and railroads were defendants in many of the earliest antitrust decisions. Even before there was a federal antitrust law, the Interstate Commerce Commission (“ICC”), the first federal regulator of an economic sector, was set up to constrain their power.

And yet the railroads were also among the early beneficiaries of a new kind of economic thinking that arose around the turn of the twentieth century, which led to near consensus that railroads and the other heavy infrastructure industries simply could not function on a competitive basis. And so was born a period of regulation under which government controlled entry, exit, and prices in the American transportation, communications, and energy industries. Because competition was displaced, those industries were also exempted from most antitrust scrutiny. Thus, not that long after their perceived wrongdoing precipitated the first antitrust legislation, the railroads managed to escape it more or less entirely by statutory exemption, and they have retained some degree of exemption ever since.

In all of these industries, though, the regime of rate-and-entry regulation has largely been dismantled, as a result of a complex series of deregulatory steps begun during the Carter administration and continuing ever since.

September 21, 2009 | Permalink | Comments (0) | TrackBack (0)